Somewhat to my delighted amazement, a limit BUY order I had sitting on the books for 13,000 (more) shares of Claude Resources (CGR) at $0.40 was hit this morning. A short while back I was hoping to get these shares filled at $0.38 but when it appeared I was unlikely to see that price again I moved my bid up a couple pennies, and today I got real lucky.
My TSI Trading record has been updated.
Claude Resource's last peak high was $2.91 on March 2, 2011. At that time gold was just under $1450 and about to make a 5-6 month trek to reach $1923. Following CGR's peak, price meandered in a range of $2.30 and $1.70. Once $1.70 gave way CGR slowly slid for another 5 months and found support at around the $0.55 area. In February, two short months ago, this price support failed and CGR reached as low as $0.38 numerous days in early March. It appears to me we are now getting something of a final retest of this incredibly low price.
I mention the price history of CGR above to make a couple of simple points. First, the share price of some mining stocks is often best understood as irrational. With this outlook one can focus more on sentiment which, as it sways for and against the mining group and the underlying metals (gold and silver) will take mining stocks from one crazy extreme low to one crazy extreme high, and so on.
And second, as I am unaware of any terribly significant development from the company since March of 2011 (earnings, projected earnings, debt, management changes, exploration achievements, dilution, etc.) when the stock traded up to $2.91, the explanation for the differences in share price then and now is a matter of investor perception. And the perception is that miners and gold are going to fall off the face of the planet and apparently soon.
Oh well, twist my arm to take some more shares. They are mine now.
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| Click on the chart to ENLARGE |
Hummm...... let's see. If gold returns to $1900 and this extreme and irrational negative investor perception begins to swing in the opposite direction.... well, I suppose $2.00, all things considered, would be a decent selling price for CGR.
Patience. And I have lots of that!
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John, Thank you for the blog!
ReplyDeleteXAU index fell below 50% retracement (135) of 2001-2011 move and below 50% retracement (127) of the 2009 - 2011 move as well.
Isn't this a trouble for gold / silver complex?
Someone wrote once that price reaches extremes in both directionswe've reached bullish extremes in 2011 and bearish extremes yet to be reached perhaps?
Anything tells you that we might still see downside extremes? i guess not since you are piling into the miners here.
Safe and profitable trading to all!
-Anji.
Anji - you ask good questions. But let's turn it around.
ReplyDelete2008, in just 4 months, retraced nearly 90% of the XAU
gain from 2001 - 2008.
Then what happened?
Further, at present, XAU has retraced 61.8% of the gain
from 2008 to 2011. Assuming the gold bull market is still
in tact, and assuming a worst case retracement of nearly
90% again, where do you think XAU will be two years from
now?
The real question to those with an ounce of resolve is this:
am I better off trying to time the bottom by staying out now,
just in case we are not at the absolute bottom, or am I better
off sitting still and relaxing while waiting for the next
huge ramp in price?
Of course everyone gets to answer that question for themselves.
But for me, as you mentioned, sitting still is just fine. Nibbling
at price as it continues lower is even better.
John, thank you for quick comment.
DeleteI see your point.
My take on this: in general, by staying in such moves (from higher levels) one is risking capital (no stops?) if bearish extremes are yet to be reached and moreover this turning out to be a bear/pause for awhile.
By staying out and jumping in when the reversal is in place and shift in dynamics is confirmed you are missing out on some profits initially, but if new highs are yet to be made in gold then whats missing a few bucks here, not important at all. On the other hand - down side risk is reduced significantly.
Safe and profitable trading to all.
-Anji.
Anji - as you generally point out, short of having a crystal ball, there is no
ReplyDeleteperfect or easy answer to the best way to handle this kind of situation. A few
years ago I started this blog and did quite well with a short term trading game.
I left a lot of money on the table with this approach, but as my winning percentage
was good, the gains added more and more money to my account.
But times have changed for me. I was half-heartedly paying attention quite a while
back and focused on other things (and certainly not my trading record). This
inevitably led my positions to get further and further under water. My response
to this, as I am now paying full attention to what is going on, is to make the best
of it and realize that the gold secular bull will bring all of my positions, bought
at any price, to profitability. But for this to work I need to utilize a new strategy.
And that is one of patience.
I have a concept in my head about how much money I would like to have in the next
couple of years. So each day I try to take actions that will position me for the
outcome I expect. In this regard, draw-downs mean absolutely nothing to me.
John, Sorry if you've covered this before but does the TSI (and fib retracements) work with both log and linear charts?
ReplyDeleteThanks. Bruce
John, Does it matter with the TSI (and Fibs) whether you use log or linear charts?
ReplyDeleteThanks. Bruce
Should be more down ahead for miners tomorrow. The volume looks good, but I don't know if we will get just an eventual bounce or if there is really a bull market in store for these guys. This is starting to feel like 2009 when everyone was trying to short the market and got blown out of the water. I REALLY hope I'm wrong. I appreciate your work John, just sharing both hopes and concerns.
ReplyDeleteBruce - TSI and Fibonacci use cold hard numbers (price). Log vs linear simply displays that information differently on the screen. But the information is just the same. So the answer is, no, it doesn't matter whether one uses log or linear.
ReplyDeleteAnon - I suspect we now have a period like May - July 2012 where gold bulls and bears duke it out for a while. One side will win, one side will lose, and then things will start to get into trend mode.
ReplyDeleteOne side won today. It's 2008 all over again for gold stocks.Before this is over you'll be able to get CGR for .25.
DeleteAnon - maybe less than that! How about 10 cents? ha ha
DeleteJohn,
ReplyDeleteAre you buying miners with both hands here?
Its a bargain of the century! This is really good for gold! Buy gold here folks and you won't regret it, come on back in 2011 it was 1920 high, here you get it for 400$ less.
I am off to the coin shop. I hope everyone is buying here with both hands.
Yay! SALE!!!!
I have come to realize that the saying "Trying to pick the bottom is a fool's game" is true. I have heard the refrain about "we are probably at the bottom -- now is the time to buy -- don't miss out -- it's the buy of a lifetime -- etc." all the way down from the top a couple of years ago. I have tried to pick the bottom multiple times and failed every time. I'm not trying this time, so the rest of you can probably rest assured that the bottom is finally in. However, I'm waiting for an up-trend to definitely be established. Maybe I can recoup some of my losses. Can anyone give me directions on how to determine when we are in an up-trend?
ReplyDeleteLoren
"NUGT, AGQ, DUST, etc. are going to ruin traders. They will blow out peoples portfolios and then they will miss the next C-wave entirely because they have no money left." Dear John, this comment was made by GARY in one of his chat responses yesterday. I would truly be grateful if you could advise your opinion on same. What is your technical analysis projecting now after fridays sell of in nugt. Whats your opinion now on Gold and Silver?
ReplyDeletethanks in advance for your kind elaboration and reply.
wish you pleasant weekend.
The most important question is: is the bull market intact? I think there is some seriously doubt out there, rightly so.
ReplyDeleteAnon - Gary's thought is that most people find these leveraged ETFs scary to trade - especially when the underlying metal/miners are going the opposite direction. And because people find these instruments scary they are prone to panic. They are prone to reach a painful draw down level and decide it best to throw in the towel. Then things will get better for a while and when their pain is not quite as sharply in their memory, they will buy a leveraged ETF again - when it appears 'safe' to do so. Unfortunately, that could happen right before another precipitous drop and again they panic and sell. You really don't get to do this many times before you have no money left.
ReplyDeleteI think the sell off is going to prove to be the end of this nonsense, but even if it is not, nothing changes for me. I think big money has been aggressively short gold and silver and manufactured the perfect panic event to cover their positions and reverse their direction. In my opinion, only a fool thinks gold could possibly do anything but appreciate incredibly well into the future. No doubt those bullion banks with thousands of short contracts are in quiet agreement with me. They needed an event like this to get their boat turned around. And maybe they need more events like this to get it turned around to their satisfaction. I don't know and they sure don't tell me. But once they get it turned around they will have only one interest - to help gold rise astronomically. I will continue to twiddle my thumbs until they get done screwing everybody to get what they want. One thing for sure. They are not going to screw me.
John,
ReplyDeleteThanks for your strong comment... i feel like we have all been screwed ( i prefer the more appropriate word with the big F) and just need to bide our time.
Those that bide their time will come out of this winners, I agree.
DeleteLoren, I will assume you are following daily charts. If so, you will be in an uptrend when you see two higher bottoms in the daily price chart. As some point the current price decline stops and prices rise. That's the first bottom. Then at some point, they go down again. If the prices turn back up at a higher price than the first bottom, then bottom 2 is higher than bottom 1. If the next bottom, bottom 3, is higher than bottom 2, you have an uptrend.
ReplyDeleteI follow nugt, I will also consider it to be in an uptrend when the 10 ema is running above the 20 ema; right now of course the 10 ema is below the 20 ema. Frankly, I also follow 2 hour charts, and look for bottoms and ema crosses in the 2 hour charts to get in and out of trades earlier than I would if I just followed the daily charts. But like you, I try to get in after a turn up in prices and not before.
Joe
John, seems everyone got their calls wrong.. gold is heading really low... and it also seems that the next turning point will be in nov 2013... sucks but it is what it is.
ReplyDeleteAnon - I agree that most got their calls wrong. I did, for sure.
ReplyDeleteAnd I don't want to take anything away from those who got it
right. But I don't think the next turning point will be in nov 2013.
I think it far more likely to be today or sometime this week.
This situation is purely technical, not fundamental. This is a case
where the bears were about to lose control of the ball for keeps
and they had to act with ferocity or get screwed themselves. They
have (are) acted and for their sakes I hope they have had the good
sense to get a whole lot of their shorts covered.
Technical situations can turn on a dime. Fundamental situations take
a long time to change. And in the end, fundamental situations always
trump technical games playing. At some point, and as I wrote I suspect
quite soon, some sovereign is going to put a floor under the market -
sustained by a longer term view of the fundamentals and fueled by the
opportunity to acquire bullion at an insanely cheap price.
When this happens, it is game over for the brief technical screw job.
Fundamentals trump technicals.
John, I agree with you on the fundamentals... lets hope these shorts are unloading. i dont want to waste my life with this game ... its a hectic game being in the PMS ya know.
ReplyDeleteFrankly, I don't care if they are unloading or not. For their sake, I said, I hope they are unloading. Right now we are getting the margin calls to force the price lower in the first hour or two. Let's see what happens after that.
ReplyDeleteThis hurts me to say, but here it goes: I think the bull market in gold is done. I don't think that fundamentals are strong enough to fight Bernanke.
ReplyDeleteHere is a nice article: http://www.clivemaund.com/gmu.php?art_id=68&date=2013-04-14
Anon - I learned a little something about Mr. Maund's character/judgement the other day and I was not particularly amused.
ReplyDeleteThat article you provided a link for, the well-written spiel about how the gold market was crashed last Friday, was nothing that Mr. Maund figured out on his own and reported.
In fact, he flat out stole the entire story from my friend, Bill Downey (www.GoldTrends.net), who is the true author. I know this because Bill contacted me early Saturday morning and asked me to edit his posted article and send it to the publishers, which I did. The next day (Sunday) I found Mr. Maund's article published here and there and I was stunned....as he pretended the story was his own. Ha ha.
That is a flat out lie.
Mr. Maund's $600/year subscription invitation reads that he does not accept kickbacks for his reports and that they are the most unbiased and objective available.
Perhaps the invitation should read that while kickbacks are not accepted, the most unbiased and objective reports are often taken from the work of others without their permission or proper acknowledgement.
Anyway, I have read so many fascinating perspectives on why gold is crashing that honestly I find it impossible to know who to believe...including Mr. Maund's technical arguments which he did not lift from Bill. And frankly, Bill understands this technical stuff much better than Clive, anyway.
So while everyone worries about who or what explains what we are seeing, I will read because it is entertaining and continue to twiddle my thumbs.
What most seem to miss is that this is an emotional price movement fueled by fear, margin calls, perhaps helped along by some rather large powers aimed at accomplishing their immediate purposes.
But nothing has changed fundamentally and will not change no matter how much gold drops.
Which is also to say that gold will be making all-time highs sooner than most think.
As for Mr. Bernanke, in my opinion, he is in a pot of very very hot water and probably not quite smart enough to realize it, unfortunately. More on that another time.
John, I really hope I'm wrong. It would certainty be better for my trading account. The article is just one example, I do my own TA as well.
DeleteUnfortunately lots of stuff gets lifted on the internet. Gary flat out copied and pasted one of your previous posts and didn't give you credit for it anywhere, but that's between you two gentlemen. The bottom line is only price pays, let's see what gold does. To be honest I'm surprised at the lack of buying at these levels, even of physical. The online vendors have a lot of inventory, previously they would sell out after 2-3% declines in the price of paper.
Gary did not flat out copy and paste one of my previous posts.
ReplyDeleteI flat out copied and pasted my article to our website and left
my name off the article intentionally. And yes, that is between
us and our partnership.
Their is a possible TSI (7,4) trend line break brewing on the 4 hour
/GC and should be giving a buy signal before the sun rises. The problem
is that with this TSI reads -85 and is a long long ways below ZERO.
I suppose if really big buyers show up (China, Russia come to mind) we
could see the trend line break lead to a massive move upwards and those
that play with fire get burned by their matches. But more likely, the TSI
will have to gradually work its way up to ZERO....meanwhile price will
continue to light up red candles.
Not looking good for CGR. Down almost 50%. Even on a day when gold is up it continues to deteriorate. Buy? Sell? Hold?
ReplyDelete